| Senate 2498: Relating to Insurance [EPCC] |
CS for SB 2498 Second Engrossed
1 A bill to be entitled 2 An act relating to insurance; amending s. 3 215.5595, F.S.; providing that domestic and 4 other insurers writing only manufactured 5 housing policies are eligible to receive a 6 surplus note in a specified amount; amending s. 7 626.916, F.S.; providing requirements for 8 insurance coverage eligible for export for 9 residential property risks; requiring that the 10 insured be notified that coverage may be 11 available from Citizens Property Insurance 12 Corporation; amending s. 626.914, F.S.; 13 revising the definition of the term "diligent 14 effort"; amending s. 215.555, F.S.; revising 15 the dates regarding an exemption from emergency 16 assessments for medical malpractice insurance 17 premiums; amending s. 627.351, F.S.; revising 18 legislative findings to provide a finding that 19 the lack of affordable property insurance 20 threatens the public health, safety, and 21 welfare and threatens the economic health of 22 the state; revising provisions for determining 23 eligibility for coverage under Citizens 24 Property Insurance Corporation; amending s. 25 627.062, F.S.; providing that certain interest 26 paid by an insurer may not be included in rate 27 base or used to justify a rate or rate change; 28 amending s. 626.9541, F.S.; providing 29 additional unfair claim settlement practices; 30 amending s. 627.70131, F.S.; deleting the 31 definition of the term "insurer"; defining the Page 1 1 term "claim"; revising provisions relating to 2 when an insurer must pay a claim; providing 3 conditions under which interest must be paid; 4 extending the date for increasing rates; 5 prohibiting issuance of new certificates of 6 authority to certain insurers; requiring rate 7 filings of certain insurers to include certain 8 parent company profits information; 9 establishing a pilot program to offer optional 10 sinkhole coverage; amending s. 626.9201, F.S.; 11 revising requirements concerning cancellation 12 for nonpayment of premium of policies providing 13 coverage for property, casualty, surety, or 14 marine insurance; defining the term "nonpayment 15 of premium"; providing that certain contracts 16 or contractual obligations concerning such 17 coverage are void under specified conditions; 18 requiring the refund of certain premiums 19 received by an insurer; providing that the 20 internal design option of the Florida Building 21 Code remains in effect until a specified date 22 for a building permit application made before 23 that date, notwithstanding provisions of ch. 24 2007-1, Laws of Florida; providing an effective 25 date and for retroactive application; applying 26 the act to any actions taken with respect to a 27 building permit affected by such prior act; 28 providing effective dates. 29 30 Be It Enacted by the Legislature of the State of Florida: 31 Page 2 1 Section 1. Paragraphs (b) and (c) of subsection (2) of 2 section 215.5595, Florida Statutes, as amended by section 5 of 3 chapter 2007-1, Laws of Florida, are amended to read: 4 215.5595 Insurance Capital Build-Up Incentive 5 Program.-- 6 (2) The purpose of this section is to provide surplus 7 notes to new or existing authorized residential property 8 insurers under the Insurance Capital Build-Up Incentive 9 Program administered by the State Board of Administration, 10 under the following conditions: 11 (b) The insurer must contribute an amount of new 12 capital to its surplus which is at least equal to the amount 13 of the surplus note and must apply to the board by July 1, 14 2006. If an insurer applies after July 1, 2006, but before 15 June 1, 2007, the amount of the surplus note is limited to 16 one-half of the new capital that the insurer contributes to 17 its surplus, except that an insurer writing only manufactured 18 housing policies is eligible to receive a surplus note in the 19 amount of $7 million and a domestic mutual insurer is eligible 20 to receive a surplus note in the amount of $12.5 million. For 21 purposes of this section, new capital must be in the form of 22 cash or cash equivalents as specified in s. 625.012(1). 23 (c) The insurer's surplus, new capital, and the 24 surplus note must total at least $50 million, except for 25 insurers writing residential property insurance covering only 26 manufactured housing or for a domestic mutual insurer. The 27 insurer's surplus, new capital, and the surplus note must 28 total at least $14 million for insurers writing only 29 residential property insurance covering manufactured housing 30 policies as provided in paragraph (a). The surplus, new 31 Page 3 1 capital, and surplus note for a domestic mutual insurer must 2 total at least $25 million. 3 Section 2. Paragraph (e) is added to subsection (1) of 4 section 626.916, Florida Statutes, to read: 5 626.916 Eligibility for export.-- 6 (1) No insurance coverage shall be eligible for export 7 unless it meets all of the following conditions: 8 (e) For personal residential property risks, the 9 retail or producing agent must advise the insured in writing 10 that coverage may be available and may be less expensive from 11 Citizens Property Insurance Corporation. The notice must 12 include other information that states that Citizens' 13 assessments are higher and the coverage provided by Citizens 14 may be less than the property's existing coverage. If the 15 notice is signed by the insured, it is presumed that the 16 insured has been informed and knows that policies from 17 Citizens Property Insurance Corporation may be less expensive, 18 may provide less coverage, and will be accompanied by higher 19 assessments. 20 Section 3. Subsection (4) of section 626.914, Florida 21 Statutes, is amended to read: 22 626.914 Definitions.--As used in this Surplus Lines 23 Law, the term: 24 (4) "Diligent effort" means seeking coverage from and 25 having been rejected by at least three authorized insurers 26 currently writing this type of coverage and documenting these 27 rejections. However, if the residential structure has a 28 dwelling replacement cost of $1 million or more, the term 29 means seeking coverage from and having been rejected by at 30 least one authorized insurer currently writing this type of 31 coverage and documenting this rejection. Page 4 1 Section 4. Paragraph (b) of subsection (6) of section 2 215.555, Florida Statutes, as amended by chapter 2007-1, Laws 3 of Florida, is amended to read: 4 215.555 Florida Hurricane Catastrophe Fund.-- 5 (6) REVENUE BONDS.-- 6 (b) Emergency assessments.-- 7 1. If the board determines that the amount of revenue 8 produced under subsection (5) is insufficient to fund the 9 obligations, costs, and expenses of the fund and the 10 corporation, including repayment of revenue bonds and that 11 portion of the debt service coverage not met by reimbursement 12 premiums, the board shall direct the Office of Insurance 13 Regulation to levy, by order, an emergency assessment on 14 direct premiums for all property and casualty lines of 15 business in this state, including property and casualty 16 business of surplus lines insurers regulated under part VIII 17 of chapter 626, but not including any workers' compensation 18 premiums or medical malpractice premiums. As used in this 19 subsection, the term "property and casualty business" includes 20 all lines of business identified on Form 2, Exhibit of 21 Premiums and Losses, in the annual statement required of 22 authorized insurers by s. 624.424 and any rule adopted under 23 this section, except for those lines identified as accident 24 and health insurance and except for policies written under the 25 National Flood Insurance Program. The assessment shall be 26 specified as a percentage of direct written premium and is 27 subject to annual adjustments by the board in order to meet 28 debt obligations. The same percentage shall apply to all 29 policies in lines of business subject to the assessment issued 30 or renewed during the 12-month period beginning on the 31 effective date of the assessment. Page 5 1 2. A premium is not subject to an annual assessment 2 under this paragraph in excess of 6 percent of premium with 3 respect to obligations arising out of losses attributable to 4 any one contract year, and a premium is not subject to an 5 aggregate annual assessment under this paragraph in excess of 6 10 percent of premium. An annual assessment under this 7 paragraph shall continue as long as the revenue bonds issued 8 with respect to which the assessment was imposed are 9 outstanding, including any bonds the proceeds of which were 10 used to refund the revenue bonds, unless adequate provision 11 has been made for the payment of the bonds under the documents 12 authorizing issuance of the bonds. 13 3. Emergency assessments shall be collected from 14 policyholders. Emergency assessments shall be remitted by 15 insurers as a percentage of direct written premium for the 16 preceding calendar quarter as specified in the order from the 17 Office of Insurance Regulation. The office shall verify the 18 accurate and timely collection and remittance of emergency 19 assessments and shall report the information to the board in a 20 form and at a time specified by the board. Each insurer 21 collecting assessments shall provide the information with 22 respect to premiums and collections as may be required by the 23 office to enable the office to monitor and verify compliance 24 with this paragraph. 25 4. With respect to assessments of surplus lines 26 premiums, each surplus lines agent shall collect the 27 assessment at the same time as the agent collects the surplus 28 lines tax required by s. 626.932, and the surplus lines agent 29 shall remit the assessment to the Florida Surplus Lines 30 Service Office created by s. 626.921 at the same time as the 31 agent remits the surplus lines tax to the Florida Surplus Page 6 1 Lines Service Office. The emergency assessment on each insured 2 procuring coverage and filing under s. 626.938 shall be 3 remitted by the insured to the Florida Surplus Lines Service 4 Office at the time the insured pays the surplus lines tax to 5 the Florida Surplus Lines Service Office. The Florida Surplus 6 Lines Service Office shall remit the collected assessments to 7 the fund or corporation as provided in the order levied by the 8 Office of Insurance Regulation. The Florida Surplus Lines 9 Service Office shall verify the proper application of such 10 emergency assessments and shall assist the board in ensuring 11 the accurate and timely collection and remittance of 12 assessments as required by the board. The Florida Surplus 13 Lines Service Office shall annually calculate the aggregate 14 written premium on property and casualty business, other than 15 workers' compensation and medical malpractice, procured 16 through surplus lines agents and insureds procuring coverage 17 and filing under s. 626.938 and shall report the information 18 to the board in a form and at a time specified by the board. 19 5. Any assessment authority not used for a particular 20 contract year may be used for a subsequent contract year. If, 21 for a subsequent contract year, the board determines that the 22 amount of revenue produced under subsection (5) is 23 insufficient to fund the obligations, costs, and expenses of 24 the fund and the corporation, including repayment of revenue 25 bonds and that portion of the debt service coverage not met by 26 reimbursement premiums, the board shall direct the Office of 27 Insurance Regulation to levy an emergency assessment up to an 28 amount not exceeding the amount of unused assessment authority 29 from a previous contract year or years, plus an additional 4 30 percent provided that the assessments in the aggregate do not 31 exceed the limits specified in subparagraph 2. Page 7 1 6. The assessments otherwise payable to the 2 corporation under this paragraph shall be paid to the fund 3 unless and until the Office of Insurance Regulation and the 4 Florida Surplus Lines Service Office have received from the 5 corporation and the fund a notice, which shall be conclusive 6 and upon which they may rely without further inquiry, that the 7 corporation has issued bonds and the fund has no agreements in 8 effect with local governments under paragraph (c). On or after 9 the date of the notice and until the date the corporation has 10 no bonds outstanding, the fund shall have no right, title, or 11 interest in or to the assessments, except as provided in the 12 fund's agreement with the corporation. 13 7. Emergency assessments are not premium and are not 14 subject to the premium tax, to the surplus lines tax, to any 15 fees, or to any commissions. An insurer is liable for all 16 assessments that it collects and must treat the failure of an 17 insured to pay an assessment as a failure to pay the premium. 18 An insurer is not liable for uncollectible assessments. 19 8. When an insurer is required to return an unearned 20 premium, it shall also return any collected assessment 21 attributable to the unearned premium. A credit adjustment to 22 the collected assessment may be made by the insurer with 23 regard to future remittances that are payable to the fund or 24 corporation, but the insurer is not entitled to a refund. 25 9. When a surplus lines insured or an insured who has 26 procured coverage and filed under s. 626.938 is entitled to 27 the return of an unearned premium, the Florida Surplus Lines 28 Service Office shall provide a credit or refund to the agent 29 or such insured for the collected assessment attributable to 30 the unearned premium prior to remitting the emergency 31 assessment collected to the fund or corporation. Page 8 1 10. The exemption of medical malpractice insurance 2 premiums from emergency assessments under this paragraph is 3
repealed May 31, 2010 4 insurance premiums shall be subject to emergency assessments 5 attributable to loss events occurring in the contract years 6
commencing on June 1, 2010
7 Section 5. Paragraphs (a), (c), (m) and (r) of 8 subsection (6) of section 627.351, Florida Statutes, as 9 amended by section 21 of chapter 2007-1, Laws of Florida, are 10 amended, and paragraph (ff) is added to that subsection, to 11 read: 12 627.351 Insurance risk apportionment plans.-- 13 (6) CITIZENS PROPERTY INSURANCE CORPORATION.-- 14 (a)1. It is the public purpose of this subsection to 15 ensure the existence of an orderly market for property 16 insurance for Floridians and Florida businesses. The 17 Legislature finds that private insurers are unwilling or 18 unable to provide affordable property insurance coverage in 19 this state to the extent sought and needed. The absence of 20 affordable property insurance threatens the public health, 21 safety, and welfare and likewise threatens the economic health 22 of the state. The state therefore has a compelling public 23 interest and a public purpose to assist in assuring that 24 property in the state is insured and that it is insured at 25 affordable rates so as to facilitate the remediation, 26 reconstruction, and replacement of damaged or destroyed 27 property in order to reduce or avoid the negative effects 28 otherwise resulting to the public health, safety, and welfare; 29 to the economy of the state; and to the revenues of the state 30 and local governments which are needed to provide for the 31 public welfare. It is necessary, therefore, to provide Page 9 1 affordable property insurance to applicants who are in good 2 faith entitled to procure insurance through the voluntary 3 market but are unable to do so. The Legislature intends by 4 this subsection that affordable property insurance be provided 5 and that it continue to be provided, as long as necessary, 6 through Citizens Property Insurance Corporation, a government 7 entity that is an integral part of the state, and that is not 8 a private insurance company. To that end, Citizens Property 9 Insurance Company shall strive to increase the availability of 10 affordable property insurance in this state, while achieving 11 efficiencies and economies, and while providing service to 12 policyholders, applicants, and agents which is no less than 13 the quality generally provided in the voluntary market, for 14 the achievement of the foregoing public purposes. Because it 15 is essential for this government entity to have the maximum 16 financial resources to pay claims following a catastrophic 17 hurricane, it is the intent of the Legislature that Citizens 18 Property Insurance Corporation continue to be an integral part 19 of the state and that the income of the corporation be exempt 20 from federal income taxation and that interest on the debt 21 obligations issued by the corporation be exempt from federal 22
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19 2. The Residential Property and Casualty Joint 20 Underwriting Association originally created by this statute 21 shall be known, as of July 1, 2002, as the Citizens Property 22 Insurance Corporation. The corporation shall provide insurance 23 for residential and commercial property, for applicants who 24 are in good faith entitled, but are unable, to procure 25 insurance through the voluntary market. The corporation shall 26 operate pursuant to a plan of operation approved by order of 27 the Financial Services Commission. The plan is subject to 28 continuous review by the commission. The commission may, by 29 order, withdraw approval of all or part of a plan if the 30 commission determines that conditions have changed since 31 approval was granted and that the purposes of the plan require Page 11 1 changes in the plan. The corporation shall continue to operate 2 pursuant to the plan of operation approved by the Office of 3 Insurance Regulation until October 1, 2006. For the purposes 4 of this subsection, residential coverage includes both 5 personal lines residential coverage, which consists of the 6 type of coverage provided by homeowner's, mobile home owner's, 7 dwelling, tenant's, condominium unit owner's, and similar 8 policies, and commercial lines residential coverage, which 9 consists of the type of coverage provided by condominium 10 association, apartment building, and similar policies. 11 3. For the purposes of this subsection, the term 12 "homestead property" means: 13 a. Property that has been granted a homestead 14 exemption under chapter 196; 15 b. Property for which the owner has a current, written 16 lease with a renter for a term of at least 7 months and for 17 which the dwelling is insured by the corporation for $200,000 18 or less; 19 c. An owner-occupied mobile home or manufactured home, 20 as defined in s. 320.01, which is permanently affixed to real 21 property, is owned by a Florida resident, and has been granted 22 a homestead exemption under chapter 196 or, if the owner does 23 not own the real property, the owner certifies that the mobile 24 home or manufactured home is his or her principal place of 25 residence; 26 d. Tenant's coverage; 27 e. Commercial lines residential property; or 28 f. Any county, district, or municipal hospital; a 29 hospital licensed by any not-for-profit corporation qualified 30 under s. 501(c)(3) of the United States Internal Revenue Code; 31 or a continuing care retirement community that is certified Page 12 1 under chapter 651 and that receives an exemption from ad 2 valorem taxes under chapter 196. 3 4. For the purposes of this subsection, the term 4 "nonhomestead property" means property that is not homestead 5 property. 6
5. Effective January 1, 2009 7 lines residential structure that has a dwelling replacement 8 cost of $1 million or more, or a single condominium unit that 9 has a combined dwelling and content replacement cost of $1 10 million or more is not eligible for coverage by the 11 corporation. Such dwellings insured by the corporation on 12
December 31, 2008 13 the corporation until the end of the policy term. However, 14 such dwellings that are insured by the corporation and become 15 ineligible for coverage due to the provisions of this 16 subparagraph may reapply and obtain coverage in the high-risk 17 account and be considered "nonhomestead property" if the 18 property owner provides the corporation with a sworn affidavit 19 from one or more insurance agents, on a form provided by the 20 corporation, stating that the agents have made their best 21 efforts to obtain coverage and that the property has been 22 rejected for coverage by at least one authorized insurer and 23 at least three surplus lines insurers. If such conditions are 24 met, the dwelling may be insured by the corporation for up to 25 3 years, after which time the dwelling is ineligible for 26 coverage. The office shall approve the method used by the 27 corporation for valuing the dwelling replacement cost for the 28 purposes of this subparagraph. If a policyholder is insured by 29 the corporation prior to being determined to be ineligible 30 pursuant to this subparagraph and such policyholder files a 31 lawsuit challenging the determination, the policyholder may Page 13 1 remain insured by the corporation until the conclusion of the 2 litigation. 3 6. For properties constructed on or after January 1, 4 2009, the corporation may not insure any property located 5 within 2,500 feet landward of the coastal construction control 6 line created pursuant to s. 161.053 unless the property meets 7 the requirements of the code-plus building standards developed 8 by the Florida Building Commission. 9 7. It is the intent of the Legislature that 10 policyholders, applicants, and agents of the corporation 11 receive service and treatment of the highest possible level 12 but never less than that generally provided in the voluntary 13 market. It also is intended that the corporation be held to 14 service standards no less than those applied to insurers in 15 the voluntary market by the office with respect to 16 responsiveness, timeliness, customer courtesy, and overall 17 dealings with policyholders, applicants, or agents of the 18 corporation. 19 (c) The plan of operation of the corporation: 20 1. Must provide for adoption of residential property 21 and casualty insurance policy forms and commercial residential 22 and nonresidential property insurance forms, which forms must 23 be approved by the office prior to use. The corporation shall 24 adopt the following policy forms: 25 a. Standard personal lines policy forms that are 26 comprehensive multiperil policies providing full coverage of a 27 residential property equivalent to the coverage provided in 28 the private insurance market under an HO-3, HO-4, or HO-6 29 policy. 30 b. Basic personal lines policy forms that are policies 31 similar to an HO-8 policy or a dwelling fire policy that Page 14 1 provide coverage meeting the requirements of the secondary 2 mortgage market, but which coverage is more limited than the 3 coverage under a standard policy. 4 c. Commercial lines residential and nonresidential 5 policy forms that are generally similar to the basic perils of 6 full coverage obtainable for commercial residential structures 7 and commercial nonresidential structures in the admitted 8 voluntary market. 9 d. Personal lines and commercial lines residential 10 property insurance forms that cover the peril of wind only. 11 The forms are applicable only to residential properties 12 located in areas eligible for coverage under the high-risk 13 account referred to in sub-subparagraph (b)2.a. 14 e. Commercial lines nonresidential property insurance 15 forms that cover the peril of wind only. The forms are 16 applicable only to nonresidential properties located in areas 17 eligible for coverage under the high-risk account referred to 18 in sub-subparagraph (b)2.a. 19 f. The corporation may adopt variations of the policy 20 forms listed in sub-subparagraphs a.-e. that contain more 21 restrictive coverage. 22 2.a. Must provide that the corporation adopt a program 23 in which the corporation and authorized insurers enter into 24 quota share primary insurance agreements for hurricane 25 coverage, as defined in s. 627.4025(2)(a), for eligible risks, 26 and adopt property insurance forms for eligible risks which 27 cover the peril of wind only. As used in this subsection, the 28 term: 29 (I) "Quota share primary insurance" means an 30 arrangement in which the primary hurricane coverage of an 31 eligible risk is provided in specified percentages by the Page 15 1 corporation and an authorized insurer. The corporation and 2 authorized insurer are each solely responsible for a specified 3 percentage of hurricane coverage of an eligible risk as set 4 forth in a quota share primary insurance agreement between the 5 corporation and an authorized insurer and the insurance 6 contract. The responsibility of the corporation or authorized 7 insurer to pay its specified percentage of hurricane losses of 8 an eligible risk, as set forth in the quota share primary 9 insurance agreement, may not be altered by the inability of 10 the other party to the agreement to pay its specified 11 percentage of hurricane losses. Eligible risks that are 12 provided hurricane coverage through a quota share primary 13 insurance arrangement must be provided policy forms that set 14 forth the obligations of the corporation and authorized 15 insurer under the arrangement, clearly specify the percentages 16 of quota share primary insurance provided by the corporation 17 and authorized insurer, and conspicuously and clearly state 18 that neither the authorized insurer nor the corporation may be 19 held responsible beyond its specified percentage of coverage 20 of hurricane losses. 21 (II) "Eligible risks" means personal lines residential 22 and commercial lines residential risks that meet the 23 underwriting criteria of the corporation and are located in 24 areas that were eligible for coverage by the Florida Windstorm 25 Underwriting Association on January 1, 2002. 26 b. The corporation may enter into quota share primary 27 insurance agreements with authorized insurers at corporation 28 coverage levels of 90 percent and 50 percent. 29 c. If the corporation determines that additional 30 coverage levels are necessary to maximize participation in 31 quota share primary insurance agreements by authorized Page 16 1 insurers, the corporation may establish additional coverage 2 levels. However, the corporation's quota share primary 3 insurance coverage level may not exceed 90 percent. 4 d. Any quota share primary insurance agreement entered 5 into between an authorized insurer and the corporation must 6 provide for a uniform specified percentage of coverage of 7 hurricane losses, by county or territory as set forth by the 8 corporation board, for all eligible risks of the authorized 9 insurer covered under the quota share primary insurance 10 agreement. 11 e. Any quota share primary insurance agreement entered 12 into between an authorized insurer and the corporation is 13 subject to review and approval by the office. However, such 14 agreement shall be authorized only as to insurance contracts 15 entered into between an authorized insurer and an insured who 16 is already insured by the corporation for wind coverage. 17 f. For all eligible risks covered under quota share 18 primary insurance agreements, the exposure and coverage levels 19 for both the corporation and authorized insurers shall be 20 reported by the corporation to the Florida Hurricane 21 Catastrophe Fund. For all policies of eligible risks covered 22 under quota share primary insurance agreements, the 23 corporation and the authorized insurer shall maintain complete 24 and accurate records for the purpose of exposure and loss 25 reimbursement audits as required by Florida Hurricane 26 Catastrophe Fund rules. The corporation and the authorized 27 insurer shall each maintain duplicate copies of policy 28 declaration pages and supporting claims documents. 29 g. The corporation board shall establish in its plan 30 of operation standards for quota share agreements which ensure 31 that there is no discriminatory application among insurers as Page 17 1 to the terms of quota share agreements, pricing of quota share 2 agreements, incentive provisions if any, and consideration 3 paid for servicing policies or adjusting claims. 4 h. The quota share primary insurance agreement between 5 the corporation and an authorized insurer must set forth the 6 specific terms under which coverage is provided, including, 7 but not limited to, the sale and servicing of policies issued 8 under the agreement by the insurance agent of the authorized 9 insurer producing the business, the reporting of information 10 concerning eligible risks, the payment of premium to the 11 corporation, and arrangements for the adjustment and payment 12 of hurricane claims incurred on eligible risks by the claims 13 adjuster and personnel of the authorized insurer. Entering 14 into a quota sharing insurance agreement between the 15 corporation and an authorized insurer shall be voluntary and 16 at the discretion of the authorized insurer. 17 3. May provide that the corporation may employ or 18 otherwise contract with individuals or other entities to 19 provide administrative or professional services that may be 20 appropriate to effectuate the plan. The corporation shall have 21 the power to borrow funds, by issuing bonds or by incurring 22 other indebtedness, and shall have other powers reasonably 23 necessary to effectuate the requirements of this subsection, 24 including, without limitation, the power to issue bonds and 25 incur other indebtedness in order to refinance outstanding 26 bonds or other indebtedness. The corporation may, but is not 27 required to, seek judicial validation of its bonds or other 28 indebtedness under chapter 75. The corporation may issue bonds 29 or incur other indebtedness, or have bonds issued on its 30 behalf by a unit of local government pursuant to subparagraph 31 (g)2., in the absence of a hurricane or other weather-related Page 18 1 event, upon a determination by the corporation, subject to 2 approval by the office, that such action would enable it to 3 efficiently meet the financial obligations of the corporation 4 and that such financings are reasonably necessary to 5 effectuate the requirements of this subsection. The 6 corporation is authorized to take all actions needed to 7 facilitate tax-free status for any such bonds or indebtedness, 8 including formation of trusts or other affiliated entities. 9 The corporation shall have the authority to pledge 10 assessments, projected recoveries from the Florida Hurricane 11 Catastrophe Fund, other reinsurance recoverables, market 12 equalization and other surcharges, and other funds available 13 to the corporation as security for bonds or other 14 indebtedness. In recognition of s. 10, Art. I of the State 15 Constitution, prohibiting the impairment of obligations of 16 contracts, it is the intent of the Legislature that no action 17 be taken whose purpose is to impair any bond indenture or 18 financing agreement or any revenue source committed by 19 contract to such bond or other indebtedness. 20 4.a. Must require that the corporation operate subject 21 to the supervision and approval of a board of governors 22 consisting of eight individuals who are residents of this 23 state, from different geographical areas of this state. The 24 Governor, the Chief Financial Officer, the President of the 25 Senate, and the Speaker of the House of Representatives shall 26 each appoint two members of the board. At least one of the two 27 members appointed by each appointing officer must have 28 demonstrated expertise in insurance. The Chief Financial 29 Officer shall designate one of the appointees as chair. All 30 board members serve at the pleasure of the appointing officer. 31 All members of the board of governors are subject to removal Page 19 1 at will by the officers who appointed them. All board members, 2 including the chair, must be appointed to serve for 3-year 3 terms beginning annually on a date designated by the plan. Any 4 board vacancy shall be filled for the unexpired term by the 5 appointing officer. The Chief Financial Officer shall appoint 6 a technical advisory group to provide information and advice 7 to the board of governors in connection with the board's 8 duties under this subsection. The executive director and 9 senior managers of the corporation shall be engaged by the 10 board and serve at the pleasure of the board. Any executive 11 director appointed on or after July 1, 2006, is subject to 12 confirmation by the Senate. The executive director is 13 responsible for employing other staff as the corporation may 14 require, subject to review and concurrence by the board. 15 b. The board shall create a Market Accountability 16 Advisory Committee to assist the corporation in developing 17 awareness of its rates and its customer and agent service 18 levels in relationship to the voluntary market insurers 19 writing similar coverage. The members of the advisory 20 committee shall consist of the following 11 persons, one of 21 whom must be elected chair by the members of the committee: 22 four representatives, one appointed by the Florida Association 23 of Insurance Agents, one by the Florida Association of 24 Insurance and Financial Advisors, one by the Professional 25 Insurance Agents of Florida, and one by the Latin American 26 Association of Insurance Agencies; three representatives 27 appointed by the insurers with the three highest voluntary 28 market share of residential property insurance business in the 29 state; one representative from the Office of Insurance 30 Regulation; one consumer appointed by the board who is insured 31 by the corporation at the time of appointment to the Page 20 1 committee; one representative appointed by the Florida 2 Association of Realtors; and one representative appointed by 3 the Florida Bankers Association. All members must serve for 4 3-year terms and may serve for consecutive terms. The 5 committee shall report to the corporation at each board 6 meeting on insurance market issues which may include rates and 7 rate competition with the voluntary market; service, including 8 policy issuance, claims processing, and general responsiveness 9 to policyholders, applicants, and agents; and matters relating 10 to depopulation. 11 5. Must provide a procedure for determining the 12 eligibility of a risk for coverage, as follows: 13 a. Subject to the provisions of s. 627.3517, with 14 respect to personal lines residential risks, if the risk is 15 offered coverage from an authorized insurer at the insurer's 16 approved rate under either a standard policy including wind 17 coverage or, if consistent with the insurer's underwriting 18 rules as filed with the office, a basic policy including wind 19 coverage, for a new application to the corporation for 20 coverage, the risk is not eligible for any policy issued by 21 the corporation unless the premium for coverage from the 22
authorized insurer is more than 15
23 premium for comparable coverage from the corporation. If the 24 risk is not able to obtain any such offer, the risk is 25 eligible for either a standard policy including wind coverage |